With regard to the Currency Deposit Ratio (CDR), all of the following is true, EXCEPT:
Show answer & explanation
Correct answer: C
Explanation
The correct answer is option 3 i.e. During festive season the CDR typically declines.
The following statement is not true with regard to the Currency Deposit Ratio (CDR):
"During festive season the CDR typically declines."
In fact, during festive seasons, people often hold more currency due to increased spending, which can cause the CDR to increase rather than decline. The CDR reflects people's preference for liquidity, depends on the seasonal pattern of expenditure, and is a behavioral parameter.